Malaysia Q2 economy grows 5.9% on better exports, consumption

SINGAPORE (ICIS)–Malaysia’s economy is expected to maintain a strong growth momentum in the second half of the year, after expanding at a faster annualized rate of 5.9% in Q2, on the back of improving domestic spending and external demand.

• Q2 marks fastest GDP growth in six quarters
• Petroleum and chemical products led Q2 manufacturing growth
• Robust demand for non-electronics goods to boost exports

On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 2.9% in April June, accelerating from the 1.5% expansion in Q1 2024, Bank Negara Malaysia (BNM) – the country’s central bank – said on Friday.

Q2 growth was primarily driven by stronger domestic demand and further expansion in exports, according to BNM.

For the whole of 2024, BNM forecasts the economy to post a 4-5% GDP growth, stronger than the 3.7% growth in 2023.

The final year-on-year Q2 GDP print was revised up from the previous estimate of 5.8% and represented a strong acceleration from the 4.2% expansion in the preceding quarter.

At 5.9%, the Q2 GDP growth was fastest quarterly growth recorded since Q4 2022, according to the Department of Statistics Malaysia showed.

Malaysia is southeast Asia’s fifth-largest economy and a net exporter of polyolefins.

It is also one of the largest producers and exporters of oleochemical products worldwide, contributing about 20% to global capacity, according to the Malaysian Petrochemicals Association (MPA).

The country’s central bank expects household spending to remain strong in H2, driven by employment and wage growth and policy support.

Investments will be fueled by ongoing projects, while exports will benefit from the global technology upcycle and robust demand for non-electronics goods, it said.

However, downside risks include weaker external demand, geopolitical tensions, and lower commodity production, BNM said.

CHEMICALS LEAD Q2 MANUFACTURING GROWTH
The manufacturing sector registered in April-June 2024 grew by 4.7% year on year, up from 1.9% in the previous quarter, aided by a broad-based improvement across all sub-sectors.

The petroleum, chemical, rubber, and plastic products segment led the expansion, with Q2 annualized growth accelerating to 4.1% from 1.1% in Q1.

Q2 final consumption expenditure rose by 5.6% year on year, up from 5.1% in Q1, as private spending increased by 6.0%, up from 4.7% in Q1.

Exports for the period rose by 8.4%, outpacing Q1’s 5.2% growth, while imports posted a faster growth of 8.7% compared with 8.0% in Q1.

Focus article by Nurluqman Suratman